If colonised peoples don’t participate in the modern economy; if we don’t take the best of what the world has to offer and make it part of our own way of doing things, we risk our survival as peoples.
“Private & Public Partnerships for Sustainable Economic Growth”. Speech to the Business Excellence Awards, Honiara, Solomon Islands
14 November 2015
by Nyunggai Warren Mundine
I’m delighted and honoured to be here tonight at the Business Excellence Awards at the invitation of the Solomon Islands Chamber of Commerce and Industry.I’ve thoroughly enjoyed my visit to the Solomon Islands over the past 3 days
Last month I had the privilege of attending the Eighth Global Assembly of the World Movement for Democracy Seoul, Korea. Today, South Korea is a global economic powerhouse. But a little over half a century ago it was one of the poorest countries in the world. In 1960 South Korea in 1960 was level with the poorest African countries on a per capita basis. It also had few natural resources or industry.
Today it is a member of the G20 and a leading global manufacturer in key industries. In the 1960s South Korea received development aid. Today it is one of the wealthy countries. In 2010 Time Magazine wrote “If Korea can do it, any country can.”
The central government played a key role in economic development of South Korea. This was a conscious choice by the government of General Park Chung Hee who believed there were no other South Korean institutions with the capacity or resources to deliver transformative change in a short time.
South Korea’s success is also a product of the rapid increase in globalisation occurring during the same period. South Korean business and industry consistently positioned themselves where they had the most competitive advantage globally. Initially their advantage lay in having low-cost labour and an ability to export cheap manufactured goods to rich countries like the USA. Over time as GDP increased, the country gained capacity to invest in infrastructure and industry and move into more high-tech and advanced manufacturing.
Meanwhile, North Korea remains locked in poverty and isolation, going backwards over the same half century.
There is no starker illustration of how a country’s systems, governance and institutions influence its economic growth. South Korea has democratic governance, a free market economy, transparency and the rule of law and participates in the global market place. North Korea is a totalitarian dictatorship, has a centrally planned and dysfunctional economy and is completely isolated from the rest of the world.
A few years ago a friend gave me a copy of a book called Why Nations Fail. It provides a fascinating and detailed analysis of why some nations thrive and others don’t, even when they share the same geography and peoples.
The book talks about what it calls “inclusive institutions” and “extractive institutions”.
Inclusive institutions allow everyone in society to participate – in education, business, the financial system, government. Inclusive institutions enforce property rights, create a level playing field, and encourage investments in new technologies and skills. Inclusive political institutions distribute political power widely to all the diverse groups. They establish and uphold law and order and a free market economy.
Extractive institutions are structured to extract resources from the many by the few. Certain groups have more opportunities than others, or the only opportunities. The ruler’s family for example. If you want to prosper in these systems, you have to be part of or get in with those groups. Extractive institutions breed corruption and dysfunction. Human ambition stagnates. And reform is hard because those few who have economic privileges do not want to lose them.
Inclusive institutions breed economic growth. Extractive institutions are a root cause of economic failure.
Democracy, opportunity and a free market system are far more essential to sustainable economic growth than a country’s natural resources, current wealth or its history.
There is probably no more stark example of this today than on the Korean Peninsula.
I founded the Australian Indigenous Chamber of Commerce in 2008. I had just attended the Australian Government’s 2020 Summit where there was much discussion about economic development and much discussion about closing the gap between Indigenous and non-Indigenous Australians.
It’s just that those discussions were not being held in the same forums. It was as if Indigenous Australians’ only participating in the economy was through welfare payments and government grants.
The Indigenous Chamber unashamedly believes in Indigenous prosperity through commerce and private enterprise. That is its vision.
Our founding principle is that commerce and private enterprise is essential to economic development and genuine self-sufficiency and that Indigenous Australians will not move from poverty to prosperity unless the conditions necessary for private enterprise and commerce to thrive exist in those communities.
That’s not to say that government is irrelevant. For one thing, Indigenous Australians are the most highly governed people in Australia. At every level of government there are additional structures for Indigenous people, on top of those that exist for everyone else. So economic development requires a partnership with governments, at the very least to de-couple Indigenous Australians from excess government dependence.
Government is also critical because it lays down the conditions under which economic development can either thrive or be stifled. Governments don’t create jobs, build businesses or deliver economic development. Economic development is generated by commerce, private capital and innovation. But governments can create the environment that will foster entrepreneurism & commercial activity; the conditions for jobs, commerce and economic development to thrive. Or they can impede it.
This is true for all societies.
What the book Why Nations Fail illustrates the importance of both the private sector and the public sector in delivering economic development. And it’s critical that they partner effectively.
This includes establishing and maintaining good governance systems and practice which is essential for a prosperous, functioning community and to lay down the conditions necessary to attract investment. By good governance I mean stable, representative government, a functioning bureaucracy, no systemic corruption, rule of law, transparency of dealings and fair, certain dispute resolution systems. It includes businesses being responsible corporate citizens and doing things like paying their taxes. Good governance is needed in all institutions, government and corporate. And business and government can work cooperatively to deliver it.
At its most basic level, economic development is about individuals providing goods and services to meet the needs of other individuals. And making a profit from doing so. So another way the private and public sectors collaborate is by doing business with each other. The public sector is responsible for massive areas of service and infrastructure delivery and is a major buyer of goods and services.
In Australia the government has brought in the Indigenous Procurement Policy under which 3% of all government procurement contracts will be awarded to Indigenous owned businesses, either directly or as sub-contractors. The number of 3% is the percentage of Australians who are Indigenous. The aim is for Indigenous people to be able to participate in government supply chains at parity with our representation in the Australian population.
The policy has great potential to spur Indigenous participation in the real economy, including through jobs and setting up small businesses. Why? Because the Australian Government’s annual procurement spend is $39 billion. Based on average contract value, by 2020, around $135 million in contract spend will go to Indigenous owned businesses annually.
The Australian Government’s explicit message to the business community is this: If you want to do business with the government you must do business with Indigenous Australians.
Governments and businesses must also come together to deliver regulatory and legislative reform to build the environment for business and job creation.
The world keeps changing. Countries can’t stand still. They must adapt to meet the changing global economy. And that means ongoing reform. Organisations like the Solomon Islands Chamber of Commerce can play a key role in this process, engaging not only with government but also the wider community to make the case for reform and its importance to business and economic growth.
The greatest challenge to economic development for Indigenous Australians is not a lack of money or assets, it is not a lack of opportunities and nor is it discrimination or historical wrongs. The greatest challenge is our mindsets, in particular the invisible barrier that can arise for all colonised peoples – that somehow participating in the modern economy means turning our backs on our culture.
I believe it is the opposite. If colonised peoples don’t participate in the modern economy; if we don’t take the best of what the world has to offer and make it part of our own way of doing things, then we risk our survival as a people.
Throughout the last few thousand years, human being have been sharing ideas and innovations and using those to advance their societies. Democracy, which originated in ancient Greece, was one of those innovations which took hold throughout Europe.
My ancestors – the Bundjalung and Gumbayynggirr people of Australia- and other Indigenous peoples of Australia – were isolated from other human groups until the late 1700s. And the first contact of Australia’s Indigenous peoples with Europeans did not involve the sharing of knowledge and innovations. Rather there was the taking of land (which the colonists regarded as belonging to no-one) and dispossession and discarding of the peoples who lived on it.
Australia’s Indigenous peoples survived through all of this. And over the past few decades the land and traditional rights of Australia’s Indigenous nations have been recognised and there has been compensation for land dispossessed. We are in a position to move on from the past and to grow and thrive and to benefit from the innovations of the broader world.
Some years ago I had the privilege of meeting Jean-Marie Tjibaou, a leader of the Kanaks, the indigenous people of New Caledonia and an inspiring individual. Tjibaou once said of his people “we are not survivors of prehistory, still less archaeological fossils, but men of flesh and blood.”
The greatest threat to indigenous peoples of colonised countries is to treat us as museum pieces, to insist that our cultures and governance must remain frozen in time at the point of first contact with Europeans. Time doesn’t stand still and should not be expected to do so for indigenous peoples. Like all human beings on this planet, indigenous peoples of the colonised continents must be able to grow and modernise. We are not fossils. We are living beings and our cultures continue to evolve. Like all other human peoples, we have the opportunity to adapt and utilise the innovations of the world at large.
This is the approach that the people of South Korea took. They had for years been fought over by Japan and China. But after the war they rebuilt themselves into a powerhouse, taking the best from countries like the United States and other countries who had helped them fight against the North Korean communists. Koreans are fiercely proud of their culture and they celebrate it side by side with modernity. They have constantly adopted new ideas and been prepared to challenge the status quo where it held them back.
Democracy, principles of corporate governance, the concept of competition and free market economics. The ability to use land as an economic asset and basis for economic development. Protection against discrimination, through the legal system. These are all innovations that indigenous peoples can and should adopt and benefit from.
Colonised peoples are people of flesh and blood. And like every other nation of people in the world through history, we must be able to take the best of what the world has to offer and use it to adapt and grow.
That is, in fact, the only way to protect our cultures and our nations.
Nyunggai Warren Mundine is the Executive Chairman of the Australian Indigenous Chamber of Commerce. This speech was delivered on 14 November 2015 in Honiara at the Business Excellence Awards hosted by the Solomon Islands Chamber of Commerce and Industry.
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Posted by admin on November 17, 2015